A default that could devastate the Chinese banking system and the larger economy..
A default that could devastate the Chinese banking system and the larger economy... China Credit Trust has warned investors that they may not be repaid when one of its wealth management products (WMP) known as the Credit Equals Gold #1 Productmatures on January 31. Why? Well, they loaned the proceeds from sales of the $496.2 million WMP product to unlisted coal miner Shanxi Zhenfu Energy - who have now been declared bankrupt. Why is this significant? There has never been a default, other than one of timing, of a WMP, so this could be the first. Any disruption in the flow of cash from investors to borrowers through WMPs would rock China with sky-high interest rates or a precipitous plunge in credit, probably both. The result? The best outcome would be decades of misery, what we saw in Japan after its bubble burst in the early 1990s. Read more: (VIEW LINK)